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Unit 6: Compensation and Rewards

according to time wage system. The total earnings of a worker under this plan consist of Notes
wages for the actual time plus a bonus which is equal to the money value of 33 percent of
the time saved in case of standard time set on previous experience, and 50 percent of the
time saved when the standards are set scientifically.
Rowan Plan
Wages, according to time basis, are guaranteed and the slow worker is not made to suffer.
A standard time is determined before and a bonus is paid according to time saved. The only
difference between Halsey Plan and Rowan Plan relates to the calculation of bonus. Under
this plan bonus is based on that proportion of the time saved which the time taken bears
to the standard time. It can be expressed as follows:

Time Taken × Hourly Rate
Bonus = Time Saved ×
Standard Time
Thus if a 20-hour job is done in 16 hours and if the hourly rate is 80 paisa, the total earnings
of the worker will be:
[16 x .80] + [4 × (16 ÷ 20) x .80] = 12.80 + 2.56 = ` 15.36
Taylor’s Differential Piece Wage Plan
Under this plan, there is no guarantee of wages. The standard of output is fixed per hour
or per day and two piece wage rates are laid. Those exceeding the standard or even just
attaining it, are entitled to the higher rate and those whose output is less than the standard
output are paid at a lower rate. For example, the standard may be fixed at 40 units per day
and the piece rates may be 30 paisa and 25 paisa per unit. If a worker produces 40 units he
should get wages at the rate of 30 paisa, i.e. ` 12. If he produces only 39 units he would be
paid at the rate of 25 paisa per unit so his wages will be ` 9.75.

The Emerson Efficiency System
In this system, the worker is allowed a certain time within which he is required to complete
his job. If he completes the job within the required time, he is paid bonus. If he takes longer
than the required time, he receives a lower bonus. Under this system, the daily wage is
guaranteed.

The Gantt System
This system is similar to the Emerson efficiency system. The worker receives the bonus only
if he attains the required standard of efficiency. No bonus is paid to a worker where his
efficiency is less than 100 per cent. The foreman is also given a bonus if the worker under
his care attains the required standard of efficiency.

Bedeaux Point Premium Plan
The chief novelty of this plan is that the value of time saved is divided between workers
and foreman, 3/4th to workers and 1/4th to foreman. This is done on the premise that a
worker cannot show good results if his foreman does not fully cooperate with him. Therefore,
the foreman is also entitled to an incentive.

6.2.6 Broad Categories of Wage Incentive Schemes
A wide variety of incentive wage plans has been devised by industries under which the
workers earnings are related directly to some measurement of work done either by himself
or by his group. There are three broad categories of incentive schemes as classified by Dunn
and Rachel. They are:
(a) Simple Incentive Plan
(b) Sharing Incentive Wage Plan
(c) Group Incentive Plan

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